Why the Coalition should not last beyond 2015

Some Tories are talking up the idea that the Coalition between their party and the Lib Dems should continue for a second term. This doesn’t sound realistic. And I think it would be a bad idea too.

Some pundits have claimed that Britain’s major parties (aside – I am thinking particularly of the three UK parties here, but there are similar dynamics with the SNP too) have become more alike and simply compete on competence (I often tread this in the Economist, for example). This may be true so far as they way that they each reach out to a group of critical floating voters, but in fact each has a very different view of the world. And it makes a difference which one of them is in government.

That was why it was such a surprise that the Liberal Democrats went into Coalition with the Conservatives in 2010, and why it has been, and remains, so painful for them. To the Lib Dems, the Tories are on the wrong side of a great historical struggle that still shapes our politics. The Tories stand for the rich, cleverly roping in those who aspire to be rich, and social conservatives and nationalists in a coalition of nastiness. The stakes in this battle are rising, since, for whatever reason, the rich have been doing very well over the last couple of decades, and have a lot to protect. Redistribution, in some shape or form, should be high on the political agenda.

The Lib Dems are essentially liberal; they have some fellow feeling with the aspirant well off (or should do), but have historically been the other side of the rich-poor divide – and find social conservatives and nationalists anathema.

But in 2010 the party had little choice. In its own way Labour was on the wrong side of history too. Labour is the party of big government, and its core constituency is public sector managers and workers, the quangocracy and the many organisations that feed off tax funding. The unions are heavily associated with these same interest groups, so its historical alliance with them does not cause undue strain. And just as the Tories marshal social conservatives to keep the show on the road, so Labour marshal those who depend on state handouts, without any real interest in curing them of their dependency.

The first decade of this century proved a happy time for Labour. The economy grew steadily, increasing the tax take, allowing the government payroll, direct and indirect, to expand, as well as the net for all sorts of benefits. To many within the party it must have seemed that they were on an unstoppable march to solving the country’s problems through government action.

But it was a castle being built on sand. Economic growth was not built on substantial advances in productivity, but on a combination of debt and good luck. We should note that most of the debt in question was in the private sector, but it is also true that government debt expanded more than was prudent. The good luck (consciously exploited Labour’s leaders) was the expansion of China and India, and the gains from trade that followed as costs of manufactured goods in particular advanced at well below the general inflation rate. In addition immigration from Poland and other central and east European countries stopped the British labour market from breaking down, and expanded the overall tax take, if not income per head (a matter of some controversy). All this has come to an abrupt halt, so that we are being forced to unpick many of Labour’s advances.

The shock to Labour supporters of finding that their dreams were built on air has been enormous. In 2012 they still mostly don’t really seem to believe it; in 2010 they were in such deep denial they were absolutely unfit to be in government, even in coalition. There was no basis to work with the Lib Dems, whose general world view is somewhat closer to them than the Tories. Given the financial crisis, a coalition with the Tories was easily the best option available to the Lib Dems, with the added benefit of the party learning how to take part in government.

How will things look in 2015, when the next General Election is due? It is still a long way off, but another hung parliament looks quite likely. Labour’s problem is not just that they are on the wrong side of history, it’s that most of the electorate realise it. They instinctively know that Labour’s aspirations cannot be afforded, and that they have no real idea how genuine economic growth can be found, so their support is stuck. But they should still advance from their lows in 2010, making a Tory outright win very difficult to pull off.

And what of the Lib Dems? The general betting is that the party will fall back. A near wipe-out is certainly within the range of possibility, but more likely is a significant loss of seats to, say, 30 or so (from the current 57). The situation in Scotland, source of many Lib Dem seats, looks dire. The consequence of this is that being part of a coalition is very difficult to make work. It’s difficult enough with the current balance between the parties. Could you really have a Deputy PM with just 30 seats? Offered a coalition by the Tories, the party would be wise to turn it down and let them make their way as best they could as a minority. The financial crisis should not be anything like as severe as in 2010, so this will look a more realistic prospect. Coalition with the Tories, especially with reduced moral and actual authority arising from a loss of parliamentary seats, is simply too toxic to continue.

And coalition with Labour? It’s difficult to see how that would work in 2015 too. There would need to be a change in party leader, and not just because he is a hate figure in Labour circles. To the public changing sides without changing leader would stink to much of ducking and weaving just to maintain office; he would need to have pulled off a really good election result to be able to stay. Changing leader is best done while not in government. And the problem of not having enough MPs would still hold.

But what if the Lib Dems should do unexpectedly well in the 2015 election, maintaining or even increasing their representation? This would certainly give the party a new moral authority after all they have been through. But the toxicity of the Tories remains; they are simply on the wrong side of history. With an increased representation, the party may well have the choice of partners, and if so, it should try to strike a deal with Labour, and one that gives the party increased overall clout in government.

But if Labour had done so badly that a coalition with them is not feasible? This would be the Lib Dem opportunity to show that they are the true opposition to the Tories. The party should offer the Tories terms that they are unlikely to accept, and then let them stagger on as a minority. A tricky stunt to pull off, but surely better than five more years in government with the Tories, giving Labour yet another opportunity to recover?